Schlumberger Limited (SLB) and Eurasia Drilling Co. (Russia’s major oil and gas driller) have joined hands for an asset swap deal and a strategic coalition in Russia.
Under the terms of the deal, Schlumberger will sell all its drilling, sidetrack and workover rigs operating in West Siberiato Eurasia. On the other hand, Eurasia will offload its drilling services business, which includes support service for 80 rigs. Financials of this deal were not disclosed.
With the uptrend in oil prices, Russian markets are drawing international attraction. While global oilfield service players are strengthening their footprints in these markets, Russian producers are also focusing on their exploration and production (E&P) businesses by offloading service units.
This deal follows Baker Hughes’ (BHI) acquisition of Siberia-based Oilpump Services in June this year and Weatherford’s (WFT) acquisition of the oilfield services unit of TNK-BP last year for $480 million. It remains to be seen how Schlumberger’s nearest rival Halliburton (HAL) reacts to this swap deal.
With Schlumberger’s superior product and technology portfolio, the company is reaping benefits from the recent surge in global E&P activities, particularly in deepwater Iraq and Russia.
Among the industry players, Schlumberger has perhaps managed its asset portfolio most actively. Year-to-date, the company has completed a few small acquisitions, namely Nexus Geo and Geoservices, in the technology space.
This, along with its strong international footprint and favorable oil economics, will keep the company’s long-term prospects positive, in our view. The company is currently rated Neutral for the long term, with a Zacks #3 Rank (Hold) in the short term.
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